After a landlord spending spree
Market figures confirm that the peak in property transactions in the first quarter of 2016, can largely be attributed to an increase in buy-to-let property investors scrambling to beat the deadline for the Stamp Duty Land Tax surcharge.
What does this mean for UK rents, for landlords and tenants? And are there still opportunities available for property investors after April?
Property sales dive in April
UK property sales took a steep fall by 45% in April, compared to record high month in March. Now the dust has settled and the data has been crunched, HMRC and other market experts confirm that there was a flurry of activity in March, with property investors racing against the clock to avoid paying the Stamp Duty Land Tax.
March saw over 164,000 property transactions, compared to just over 94,000 in April. Of the 94,000, 84,000 were residential, the lowest number in a month for three years.
This volume was 14.5% lower than April 2015.
Rise in available rental properties
Whilst some new property owners will be spending time renovating properties before renting them out, April has already seen an increase of rental properties listed.
Rightmove reported an 11.5% rise in new rental properties in April.
In London, wider research by Righmove and investment firm Property Partner, showed a 9% increase in properties for rent, whereas some places, like Worcester, surged by nearly 50%.
The research looked at 90 UK towns and cities and reported that supply has increased in 82%.
How could this affect rental income for existing landlords?
Well, in theory, more supply, usually means a fall in the rental price that can be commanded.
However, figures show that rental returns have been falling regardless, marginally. According to Reeds Rains buy-to-let index, rents have fallen from an average of £816 per month in September 2015, to £791 a month in April 2016.
There is speculation that rental prices won’t fall much further.
“Tenants still need homes and demand is still soaring” Adrian Gill, Reed Rains “Later this year the balance of supply and demand may shift in favour of landlords.”
Taking this into account, it is predicted that a short term influx in the supply of rental properties, won’t affect the fundamental market.
This provides some reassurance for landlords, although tenants will no doubt be hoping that with added choice they can be more selective about which property they choose to rent.
Are there opportunities for buy-to-let investors after April?
There has obviously been a surge in property investors adamant to keep their investment cost low by avoiding the 3%, however with investment there is always a cost.
For property owners having to suck up the 3% tax surcharge after April, it will be an added cost, however, as long as the returns of the investment are still profitable longer-term, it is likely that property investment still holds opportunities for many.
3 reasons why buy-to-let still has opportunities for investors:
- High demand for rental properties – not dissipating any time soon, by the look of things
- Stable investment yields
- Record low buy-to-let mortgages
Read more: Is buy-to-let investment really dead?
Considering buy-to-let investment? We can help.
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